The phenomenon of "nonsense premium" in the field of Crypto Assets

In the field of Crypto Assets, an interesting phenomenon has caught people's attention: projects that only have a flashy website often manage to raise millions of dollars in funding. This is not a coincidence, but rather a result of game theory at play behind the scenes.

This phenomenon reminds me of a scene from the American TV show "Silicon Valley": companies with no revenue are valued higher than profitable companies. The logic behind this is that when there is no revenue, people can imagine infinite possibilities. The Crypto Assets field has pushed this logic to the extreme: the more ethereal the product, the more funds that may be raised.

When a project has a real product, it must face reality: possibly disappointing user numbers, technical limitations, and metrics that cannot be faked. In contrast, projects that only have a white paper are limited in value only by imagination. This creates a contradiction: practical projects may actually be punished by the market.

In the process of fundraising for Crypto Assets, there is an information asymmetry between project founders, venture capitalists, and ordinary investors. For project founders without a product, the best strategy is to maintain a vague yet exciting description, emphasizing potential rather than reality, and to spare no effort in creating FOMO.

The reason this phenomenon continues to exist is that investors face a choice similar to the "prisoner's dilemma": although it is wiser to wait to see a viable product, entering early often yields the richest rewards. Thus, seemingly rational individual choices lead to an overall irrational outcome.

A project that only has Medium articles can claim to disrupt everything, while a project with actual code must face real-world issues such as user numbers, technical limitations, and competitive disadvantages. This gives rise to the so-called "bullshit premium" - a valuation premium obtained completely unconstrained by reality.

When lacking the ability to assess project quality, investors often rely on signals such as comments from influential figures, exchange listings, and the price increases of tokens. Projects without products can allocate all their resources to generating these signals instead of engaging in actual development.

Some real-world cases confirm this theory:

1. Berachain: Achieved a valuation of billions without launching the mainnet.
2. Aptos: A blockchain project that claimed to process 162,000 transactions per second raised $350 million, but its actual performance at launch was far below the promise.
3. Worldcoin: It has received billions of dollars in investment with the concept of "exchanging biometric data for tokens."

This situation is difficult to change, and the reasons include: the real existence of FOMO psychology, the difficulties in technical validation, the short-term orientation of fund managers, and the inconsistency of individual and market interests. Therefore, projects without products are likely to continue raising more funds than those that are truly developing practical products.

This is not a matter of game rules, but rather that certain participants are too skilled at exploiting the rules. In the Crypto Assets field, understanding this "bullshit premium" phenomenon is crucial for both investors and project founders alike.